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Research

World trade talks: how the EU is blocking progress

Hopes are fading fast for a successful agreement at the WTO talks in Hong Kong next month. If the talks collapse developing countries and the poorest people in the West will be the biggest losers, and the blame will rightly fall on the EU for its refusal to make significant efforts to reduce its trade barriers and subsidies.

In a briefing note we look at the claims made by EU Trade Commissioner Peter Mandelson and show how little the EU is offering in reality. A spokesman for Peter Mandelson has already made it clear that the EU will not offer to reduce its agricultural subsidies "by a single cent". And despite the EU's claim that it will cut its agricultural trade barriers in half, we find that the EU's offer amounts to a cut of just 1% in real terms. It's no coincidence that the rest of the world is now blaming the EU for undermining the talks.

What they said:

Indian Trade Minister Kamal Nath: "Peter Mandelson's proposal. says 'I want my pound of flesh'. it is a question of giving an inch and asking for a mile." (Independent, 8 November)

Alfredo Chiaradia, Argentinian deputy Trade Minister: "They made sure that we couldn't progress. The EU proposal was crafted. to ensure that the round stops in its tracks." (Times, 10 November)

Celso Amorim, Brazilian Foreign Minister: "Peter Mandelson is not engaged in serious negotiations and the whole process is useless. The EU wants the moon. but it is not able to provide the equivalent in agricultural matters." (Agence Europe, 11 November)

Government giving way on rebate?

Jack Straw has said that the Government is no longer negotiating whether the UK should increase its payments to the EU, but how much more it should pay. He said, "What we are talking about is the size of any increase to the United Kingdom, relative to others, as well as the size of the increases for other countries, not whether or not there should be one." (Telegraph, 8 November) It has been suggested that a likely deal might involve leaving the British rebate formally unchanged but increasing the UK's net contribution through other channels. However, the UK's payments to the EU are already accelerating. Even under the existing rules, the UK will pay 155 billion pounds more into the budget than it receives back over the next 15 years. We argue that the UK should not agree to pour any more funds into a budget which is fundamentally flawed.

Click here to read our briefing on the budget and the UK rebate

Trade justice or free trade?

Trade justice campaigners held a mass lobby of MPs last week to promote "fair trade not free trade". Some of the ideas of the Trade Justice Movement are excellent - such as the removal of trade barriers raised by developed countries against poor countries. However, other ideas advocated by a number of groups within the trade justice lobby are misguided, and some of the claims made about the "damaging effects" of free trade are not based on a balanced assessment or a proper economic analysis.  Read our briefing on the Trade Justice Movement

Analysis

French riots: the social failure of the "European social model"

Johnny Munkhammar, director of the Swedish think-tank Timbro, writes for Open Europe. He argues that the riots which have engulfed France in the last two weeks are a symptom of a wider problem: the so-called "European social model is not just damaging Europe's economies but failing in social terms too." Johnny has just released a new book: "European Dawn - After the Social Model"

News in Brief

ECB threat could destroy euro. This week the European Central Bank stepped up the pressure on Italy, Greece and other eurozone countries by warning that it will refuse to accept their sovereign debt as collateral if their credit ratings slip. In the Independent Jeremy Warner argued that the threat could lead to problems for the single currency: "The moment the ECB starts refusing debtors collateral, spreads would widen and the single interest rate would disintegrate. It's uncharted waters and nobody knows where it might lead." The Guardian reported that hedge funds are speculating that Italy will eventually be forced out of the euro so it can devalue its currency and reinflate its economy. (10 November)

Auditors will refuse to clear EU accounts for 11th year. According to the Financial Times the European Court of Auditors is expected to say next week that it cannot approve the EU's accounts for the 11th successive year. EU finance ministers promised after a meeting this week that they would clamp down on fraud in the EU but rejected demands that they should take personal responsibility for the problem (9 November).

Dutch to set up EU watchdog.

The Dutch government announced this week that it is planning to appoint a high-level official to screen new EU legislation, and "sound the alarm in time" so that undesirable EU regulations can be opposed by the Dutch government. The 'watchdog' will also look at areas where less EU regulation is possible and will try to stop the EU legislating in areas which should be left to member states. (NIS news, 8 November)

Mandelson broke ministerial code of conduct.

The Sunday Times has revealed that Peter Mandelson broke the ministerial code of conduct by ignoring advice to consult a government committee before accepting any private sector work after leaving government. It was the same offence that forced David Blunkett to resign. Despite the breach, Mandelson was subsequently offered his current job as EU Commissioner. (6 November)

Poll shows trust in EU plummeting.

A new Eurobarometer poll for the European Commission has found a sharp fall in levels of confidence in the EU institutions across Europe. In the UK the poll found that a majority - 42 percent to 40 percent - believed the UK has not benefited from its 30-year membership and only 36 percent of those questioned considered membership "a good thing". (The Business, 6 November)

EU threatens UK over 999 calls.

The EU Commission is threatening to take the British Government to court unless it does more to publicise the European-wide emergency services number 112. In 1982, the EU decided that all member states should use the German emergency number 112 and aims for it to eventually replace 999 in the future. (Mail on Sunday, 6 November)

Prince Albert of Monaco receives 300,000 euros from CAP. Prince Albert II of Monaco, whose fortune is estimated at 2 billion euros (1.4 billion pounds), received 287,308 euros in subsidies from the CAP last year. According to a report from Paris-based economics think-tank Groupe d'Economie Mondiale de Sciences Po, less than one percent of French farmers - the largest ones - receive more in subsidies than the bottom 40 percent of farmers taken together.

EU to spend millions celebrating golden jubilee. The Sunday Telegraph has revealed that the EU is planning to spend millions celebrating its golden jubilee in March 2007 with 50 days and nights of parties. Sophie Goeminne, from the Belgian government is quoted saying, "This will be our way of bringing the EU closer to its citizens." (29 October)

Making our case: Open Europe in the press

Dropping barriers can spur African growth

Financial Times 10 November

In a letter Lorraine Mullally from Open Europe wrote, "There is a large body of economic evidence which suggests that in general, countries which have opened their economies have done better than those which have not, and that developing countries still stand to see large gains from further trade opening. getting rid of global trade barriers would increase African GDP by just under 6 percent, lifting millions out of poverty."

Price of Blair's EU rebate salvage job

Evening Standard 10 November

"Open Europe, has done the sums, and they make pretty grim reading. Over the 30 years to 2003, the group calculates, even with the rebate Britain has contributed a net 76 billion pounds to the EU, measured in 2004 pounds. This is hardly small potatoes."

Only 36 percent of UK thinks EU is a "good thing"

7 November: BBC London Radio: Open Europe director Neil O'Brien argued that unless the EU radically reforms people in the UK will become even more hostile to it.

EU budget negotiations

6 November. BBC Politics Show
Open Europe's Deputy Chairman Derek Scott warned against giving away part of the rebate in exchange for vague promises of CAP reform. He warned that giving away on such a sensitive issue at the present time would compound the Government's domestic problems.

Latest news on the UK rebate added 18 Dec 2005.

Support for EU crashes across the Continent.

6 November: The Business

"Open Europe, a new Eurosceptic think tank, said the poll compounds the case for reforming the EU that is being made by Tony Blair. 'It is striking that most people in the UK now think there are no benefits to Britain from EU membership,' said Neil O'Brien."

'Gutless' Blair dodges MPs

30 October: Sunday Express

"The Open Europe think-tank revealed that the CAP and EU trade barriers cost the average British family an extra 1,500 pounds a year. Open Europe director Neil O'Brien said: 'The EU's trade barriers act like a stealth tax which hits poor people the hardest.'

If Europe's trade wall falls all the world's poor will benefit.

30 October: The Business

In an article Derek Scott argued, "Britain and Europe would gain from free trade - but poor countries could gain even more. Getting rid of trade barriers would boost Europe's economy by about 2 percent. But GDP in African countries would increase by three times as much - just under 6 percent - lifting millions out of poverty."