Why the EU-Mercosur worries environmentalists

Why the EU-Mercosur worries environmentalists

Last June, after 20 years of negotiations, the EU signed a trade agreement in principle with the South American trade bloc Mercosur, the fifth-largest economy in the world. That deal would open a large market to Mercosur’s not suspended member states – Argentina, Brazil, Paraguay, Uruguay – multiplying the current trade value of €88 billion. 

Up to 90 percent of tariffs on goods would be eliminated on both sides. Europe would save on goods such as wine, spirits, chocolate, biscuits, tinned peaches, and olives, and import a quota of 99 tonnes of beef per year, as well as 180’000 tonnes of sugar and 100’000 tonnes of poultry. The EU hopes the deal would expand its access to South American telecommunications, transport, and financial services, and expects it to make the region more attractive to American, Japanese, and South Korean markets. 

Protestors of the deal from the farming sector worry that South American beef imports would hurt local European farms. One concern is described by The Irish Times as Brazil’s reputation for “meat fraud”, since the country does not follow the same ethical and food safety standards imposed under EU regulations.

While the EU claims that both parties would have the power to put regulations on imports should any harm come to local markets, it is unclear how long these measures can be put in place and exactly each sector would be protected.

Despite intentions to expand the high-carbon beef industry, the deal explicitly references the Paris Climate Agreement with commitments to fight climate change and to transition to a “sustainable, low carbon economy”. But to meet this goal, rigorous enforcement of regulations on the quotas would need to be put in place whether or not harm does come to local markets.

As for the deal’s sure environmental degradation, Mercosur members would have to further eat into their cattle ranching land. In Brazil, climate change denier and deforestation enthusiast President Jair Bolsonaro naturally contradicts environmental protection and sustainable development efforts. He has threatened to tear down the Amazon rainforest to make room for more beef farms, and is widely condemned by international media for intentionally starting this year’s Amazonian wildfires with his policies. 

Since 1978 over 780’000 square kilometres of Amazonian rainforest has been destroyed across Brazil, Peru, Columbia, Bolivia, Venezuela, Suriname, Guyane, and French Guiana for cattle ranching, soy farms, mineral excavations, palm oil extractions, urban planning and illegal logging projects. According to satellite data, Brazil has by far lost the most tree cover in comparison to other countries which share the Amazon. 

To come into effect, the draft Mercosur Agreement must be ratified by the European Council and the European Parliament, as well as by the Mercosur Parliament. This may be a very long process.

Irish Taoiseach Leo Varadkar said his government will block the deal, unless Brazil takes steps to protect the Amazonian rainforest. Varadkar previously said his government would assess the financial impact of the deal, but supported the deal’s bid for billions in savings on trade duties for Irish companies. 

The opposition party Sinn Fein led political support to reject the deal. A majority in the Dail voted against it and called for the Irish government to form alliances with other EU members to do the same. However, the deal must pass under the EU Trade Council for any opposition to be considered in law.

In Austria, the draft deal was rejected by the national Parliament EU’s subcommittee. Together with Ireland, they may use their veto in two years’ time to block the EU-Mercosur deal.

 

 

Photo by chuttersnap on Unsplash

 

 

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This second article will give you an insight of the European Union’s perspective on Brexit.

 

A quick update: Where are we now? 

At the beginning of the month, Prime Minister Boris Johnson wrote a letter to Jean-Claude Juncker, President of the European Commission, suggesting a new Protocol on Northern Ireland and Ireland. In fact, Johnson did everything he could to keep its proposal secret. Unfortunately for him, but not for democracy, the EU wanting transparent negotiations, secrecy was off the table. Some might read this as PM Jonson’s admission of weakness.

After insisting on the “very little time left to negotiate”, he developed what he called a “fair and reasonable compromise”: the “two borders, four years” proposal. The idea is that Northern Ireland would leave the European customs union (the tariff-free trading area), but would keep following the Union’s single market rules (safety standards for all goods, including food) which are the most complex to check. It is nicknamed a “two borders” deal because there would be a border on the Irish island for customs, and another in the Irish sea to monitor single market rules. This proposal to create two borders where there is none so far is a way of multiplying the problems. The reason of existence of that proposal is clearly due to the DUP (even though the party doesn’t hold the majority in Northern Ireland).

If this proposal should be accepted by the Union, it would start to apply at the end of the transition period. But first of all, Northern Ireland’s assembly would have to give its consent, initially in 2021, then every four years. If the assembly, which has not met since early 2017, contests the deal, it would know that this would bring hard border back. Two lectures of the deal exist. On one hand, as Northern Ireland’s Assembly does not meet anymore, it won’t be able to use its veto and the proposal will be granted anyway. On the other hand, you can read into it that this proposal could be the only reason for them to meet again.

Brussels and Dublin see this offer as relying on vague promises. Indeed, PM Johnson gives no clear answer on where the checkpoints would be and how the control would be organised, putting close cooperation between British and Irish authorities forward. European countries agreed that this deal “does not provide a basis for concluding an agreement”. 

Yet, Thursday’s meeting between Taoiseach Varadkar and PM Johnson shows that negotiation may not be dead (or not as dead as we thought). This common statement stays really ambiguous, and the situation was never that uncertain. But a deal seems now possible to reach as “promising signals” have been sent according to Donald Tusk, the President of the European Council. Yesterday, Michel Barnier and Brexit Secretary Steve Barclay held a two-hour meeting, said to have been “constructive”. We’ll see if there is a deal on the table for the EU heads of government summit, taking place on the 17th and 18th October. If so, many European countries would be looking for the Irish approval before giving their own. If Ireland goes along with the deal, then it would most likely be voted. We could even reach unanimity. 

 

A bit of economy: How will Brexit impact the EU’s economy?

The outcome of Brexit is not yet known. Various scenarios are still plausible. So far, it’s down to a deal or a no-deal Brexit. The first scenario would imply a soft Brexit (in case of an agreement leading to a close relationship between the UK and the EU), a hard Brexit (in case of a deal leading to a distant relationship), or an in-between. In the second scenario, Brexit will definitely be hard but might be orderly. The EU-UK trade relationship would fall back on the World Trade Organisation’s (WTO) regime, without any major disruptions on the markets. All member states of this global body for international trade give the organisation a list stating the trade tariffs and quotas they seek to impose on any other member state. Therefore, in a WTO scenario, the UK would have to follow the restriction list submitted by the EU. 

According to Johnson’s letter to Juncker, the UK is asking for a Free Trade Agreement (FTA) with the EU, very much alike the CETA, the comprehensive trade agreement between the EU and Canada. If this should happen, we would face a deal Brexit, but it’d still be a hard Brexit since the UK would be out of both the customs union and the single market. But, surely, any agreement would reduce the barriers inherent to the WTO regime and be more profitable for both parties.

The EU’s trade partners will suffer some loss on account of Brexit, but nothing in comparison to the UK itself. Actually, the EU’s main source of economic loss due to Brexit should be trade (and not the loss of the British contribution to the European budget), in the short as well as in the long term, in both deal and no-deal scenarios. On the contrary, the UK’s economy will endure some tough deprivations losing international investments (including from the Foreign Direct Investment, FDI), as banks and companies which want to operate at a European level will relocate their activity to the continent. UK will also miss high-profile workers coming from the Union. 

Post-Brexit, the Union’s GDP could be between 0,3 and 1,5% inferior than without Brexit. It doesn’t convey that the Union will face this concrete loss, but the EU’s GDP won’t be as high as if there was no Brexit. Most national European GDP should be less impacted than the EU’s. The main economic victims of Brexit are expected to be Ireland, Cyprus and Malta (due to the importance of trade from these former British colonies with the UK), the Benelux States (Belgium, Netherlands and Luxembourg), and Denmark. Unfortunately, Ireland’s economic losses from Brexit are presumed to be worse than the UK’s, whatever Brexit option is followed, even with an FTA.

In the eventuality of a no-deal, the value of the GBP compared to the euro or US Dollar prices would drop in the short term. Yet, it is difficult to predict whether it would be bad news for the UK or EU’s economy. All we know so far is that the 8,5% depreciation suffered by the GBP in June 2016 helped the competitiveness of UK export companies but was hardly counterbalanced by the rise of import costs, affecting both import companies and consumers. 

Brexit consequences on wages and unemployment would depend on each member state’s policies. If struggling because of the Brexit, companies shouldn’t impact their misfortune directly on the wages. They’d presumably abandon raises or reduce the number of working hours of their employees. Even if employment losses are expected, no unemployment boom is likely to happen. The employment market is under the influence of many other various events, such as Trump’s protectionism policy for example. 

 

A bit of geopolitics: What will be the consequences on borders within the EU?

From a European perspective, the border issue caused by Brexit is firstly a safety issue. When talking about the Irish border, the EU is well aware of the island’s history and aspire to avoid a renewal of tensions. The Union holds the same concerns regarding the (former) dispute about Gibraltar’s sovereignty. 

Border is also synonym of trade control, meaning the great come back of checkpoints, queues, etc. Moreover, it brings restrictions on the number of products that can travel, including what you carry with you in your car. 

Even if the Eire-Ulster’s trade is not such a big deal in comparison with the UK-EU’s trade (5 billions GBP against 600 billions GBP), this should impact Northern Ireland’s economy (more than the Irish economy). As suggested by PM Johnson earlier this month, a “double border” could be implemented. This would make Northern Ireland an ideal place for (frauds in) trade. The UK would most certainly mainly trade with the EU through the North. 

The situation in Gibraltar, a British territory located in the South of Spain who voted massively to remain in the EU in 2016 (about 92%), also needs to be settled. The 1,2km Spanish-British border issue was sorted in the third Protocol of the draft agreement, but not without raising the anger of Spain first. The accord reached in 2018 should remain applicable in case of Brexit with a deal. The UK and Spain will have to reach a specific agreement on Gibraltar’s status by the end of the transition period. 

The come-back of the immaterial border of Britain will also have some repercussions. Long queues are to be expected on motorways around harbour cities, such as Dover in the UK or Rotterdam, Zeebrugge, Oostende, Calais on the continent. 

 

A bit of solidarity: why is the EU behind Ireland?

The EU immediately took Ireland’s side as one man. There was kind of a “club reflex”. The UK chose to leave and create difficulties, not Ireland. The Union protects one of its own, victim of a situation it didn’t choose. That is for sure the main thing. However, the EU is also afraid that Ireland would fly solo and reach a bilateral agreement with the UK, putting the EU in difficulty. 

So basically, the Union’s support is based on two reasons: first, Ireland is one of the EU members and therefore is entitled to solidarity; second, if Ireland should be a UK’s privileged partner it would be damaging for the EU. 

 

 

Based on interviews with Patrick Bisciari, economist at the National Bank of Belgium, and Marianne Dony, professeur ordinaire at the Université Libre de Bruxelles.

 

 

Photo by Dunk on Flickr.

 

 

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Climate change: why policies play a key role

The effects of climate change are not limited to the natural world. While humans are impacted by the natural changes in their environment and climate, climate change causes negative economic impacts to increase. The effects of escalating temperatures, wildfires, deforestation, drought, and rising sea levels will continue to creep into all sectors of the economy. These events force communities to relocate, but also to lose their livelihoods and their homes, creating economic distress. And it seems that no country will be spared.

According to the World Bank, worker productivity declines by two percent for every degrees celsius above room temperature. A report by the International Labour Organization found that by 2030 a decrease in productivity will reach 2.2 percent of global working hours because of heat stress.

High temperatures put workers at risk of dehydration, stress, and heat stroke – which is a major concern for those who work in direct sunlight such as construction workers and farmers. It is estimated that by 2028 (just nine years away) heatwaves and other effects of climate change will cost the USA $360 billion per year in health costs.

The multiple and large-scale impacts of climate change lead many to think that individual actions alone won’t solve the problem entirely. Businesses, if not compelled by the law to change their practices, are unlikely to take meaningful action. So to truly curb global warming and its effects, it is clear that governments need to step up, and make changes at a higher level. 

The UN Climate Report 2018 outlines a number of changes governments can make. The report advises that we transition out of dirty sources of energy (such as fossil fuels) and instead opt for low-emission energy produced by renewable sources. It also suggests that we alter our diets to lower our dependence on land and water-intensive agricultural practices (such as beef and soy consumption), and encourages the use of green roofs on buildings. However, these solutions remain financially out of reach for many individuals without the help of government support.

Some positive initiatives have been taken by governments hand in hand with citizens. This was the case recently in Ethiopia, when volunteers from the Green Legacy Initiative planted a record of 50 million trees in just 12 hours. The Ethiopian Prime Minister Abiy Ahmed said he envisions a total of four billion trees to be planted in an effort to tackle deforestation in the country, mainly caused by a growing population and unsustainable farming.

In addition to policy changes, we need to see more initiatives like this happen.

 

 

Photo by Joakim Honkasalo on Unsplash

 

 

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Brexit: the basics

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Let’s start with the basics…

 

 A bit of history: How did the UK get to vote for Leave? 

When World War II was over, many countries around the world, especially in Europe, decided it was time to cooperate to insure peace and stability for all. But in the mid 20th century, as the European Economic Community (ECC) started to take shape, the UK showed no real interest to be part of any kind of Union, even though they were at negotiation tables. Eventually, when the UK realised that the EEC was actually working well, it tried to jump on the bandwagon. 

Once within the EU, the UK objected to every reform of the fundamental Treaties the Union wanted to make. It also negotiated every possible opt-out, signifying that it has always asked for a special status when the Union legislates on a particular subject, and obtained it. Sometimes, it has brought Ireland along to the opt-out side, as in the negotiations of the Treaty of Amsterdam (1997). Indeed, the UK didn’t want to join the European Customs Union as intended in the Schengen agreement, which was to be part of the Amsterdam’s Treaty. Ireland and the UK already having a customs union of their own, Ireland opted-out too. 

When it comes to understanding the relationship between the Union and the UK, the British electoral system is also of great importance. Every national campaign has been based on addressing what the outgoing Government failed to achieve. So, whenever a national issue emerged, politicians blamed the decisions made by the country’s leaders at the time. In an attempt to be re-elected, most of them would accuse the Union to be the mother of all devils. In response, the opposition would promise that this would never have happened under their governance, because they would never let the Union dictate them what decision to make. One could think this has instilled a sense of mistrust towards the EU in many British citizens.

In running for re-election in 2015, David Cameron, Prime Minister at the time, made the Brexit referendum a campaign promise. Once re-elected, he organized the election on the 23rd of June 2016. What came next was not on his agenda. The “leave” poll won by 51,9%. Forced to admit the defeat of the “remain” campaign, Cameron stepped down the very next day. A few weeks later, Theresa May swore in. The British Parliament gave the green light to trigger article 50 of the Treaty of Rome in February, and so did PM May on the 29th March of 2017. 

 

 

A bit of legal procedure: What says article 50?

The Treaty on the functioning of the European Union, also called Treaty of Rome, equipped itself with article 50 in 2007 thanks to the Treaty of Lisbon. This article gives a unilateral right to any member state which would want to leave the Union to do so, as long as it notifies the European Council and respects its national constitutional rules. Once triggered, the leaving state has two years to negotiate a “divorce” settlement. Obviously, this lapse can be extended, if the departing state asks for it and if the European Council agrees to it by unanimity. 

However, nothing is said in the treaty about revoking this notification to leave. Therefore, the Court of Justice of the European Union had to rule on this eventuality, and decided that such a revoking right exists, that it is a unilateral right such as the right to leave (understand: the EU could not go against a withdrawal). 

 

 

A closer look at the negotiations results: What is in the draft agreement negociated by the EU and PM May?

Heads up: we don’t pretend to give a complete lecture of the 585 page draft agreement here! We are just trying to give an overall view of what’s written in this draft. 

The draft agreement is divided into six parts and three protocols. 

The first part enumerates the common provisions. It lays some general rules, including the obligation for the UK to keep following the European Court of Justice (ECJ) decisions whenever European law keeps applying. Interesting when you remember the leave campaign stated that the UK would be outside the reach of the ECJ… The draft also reveals that the agreement shall have a direct effect, allowing the judges to find breaches of the agreement itself. Therefore, no need to invoke another bill that would transpose the content of the agreement into national law.

In part II, the negotiators focused on the European citizens. Every British individual that lives in another Union state, and every foreign European citizen that lives in the UK, will be granted the same rights he/she enjoys now in various matters such as rights of residence, social security rights, workers’ rights, until the end of the transition period.

Talking about the transition period, it is organized in Part IV of the draft. At the time, the parties agreed on the 31stDecember 2020 as the date of the end of the transition. An adjournment might be granted but only once and it can’t exceed two years. Being in transition would mean that the UK is officially out of the Union, so it can’t vote nor take part of the decision anymore, but has to keep following many European rules in the meantime, while the future of the British-European relationships is discussed. The purpose of the transition is to give some more time to negotiate a Treaty on future relations, once the divorce has been consummated. 

The fifth part settles the financial agreement. Both sides agreed on the maths instead of an amount. The formula is based on three principles. One, no European state should pay more to, nor receive less from the Union because of Brexit. Two, the UK has to pay for the commitments it made while being in the Union. Three, the UK should not pay more to the Union than if it had stayed within the Union. 

The first Protocol talks about Ireland and Northern Ireland. It seems clear that the negotiators did all they could to prevent the implementation of a hard border on the Irish isle, mainly to preserve the peace process in Ulster. So they came up with the “backstop”. Concretely, there would be a deeply intense cooperation between the two parties. So deep that the UK would follow most of the European customs rules, preventing the need of border controls. This solution is meant to be applicable during the transition period only, again to give the parties more time to reach a settlement on the matter post-divorce. 

At the origin, the backstop was supposed to be applicable in Ulster only and not in Great Britain. That was without thinking about the DUP, a unionist party in Northern Ireland that allowed PM May to have a majority coalition in the Parliament. The DUP refused to consider an offer that would put Northern Ireland under different rules than the rest of the UK, and additionally quite similar than those followed by Ireland. Therefore, PM May had no choice but to extend the backstop to the whole UK. 

This solution doesn’t please many Brits, and is the main reason why the draft is still a draft. On one hand, the backstop goes against the hard Brexit encouraged by some, and on the other hand, this means following some rules that you don’t get to edict anymore.

 

 

A quick update: What’s happening now? 

Since late July 2019, Boris Johnson is the head of the British state. His dearest wish is to deliver a “Halloween” Brexit no matter what, with or without a deal. But that was leaving aside the Parliament’s will. On the 4th of September 2019, the Lords voted a bill against a no-deal Brexit. If by the 19th of October PM Johnson has not reached an agreement with the Union, he will have to ask for an adjournment. 

So far, the Union was opposed to both reopening the negotiations and granting an adjournment, in regards of the PM’s declarations about Brexit and the EU. Anyway, things might be getting slightly different now. Johnson recently submitted an updated version of the draft agreement to the Union. The latter might be more open to consider an adjournment if the British PM made interesting propositions, and if elections were to be held in the country. Slight problem, the Parliament voted twice against the holding of new legislative elections… However, the Lords might change their minds if the Union gives the UK more time.

We should know a bit more about how the situation will evolve on the 4th October, as Stephen Barclay, the British Brexit Secretary, and Michel Barnier, the EU’s chief negotiator, will meet. 

 

 

 

Photo by John Cameron on Unsplash

 

 

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The first cars were electric, and they’re coming back

The first cars were electric, and they’re coming back

Even though the electric car arrived on the public scene first, it proved to be an unworthy competitor to the fuel powered vehicle, which was cheaper, faster and more reliable. But electric cars are taking centre-stage again.

Contrary to what most people believe, the electric car is not an invention of modern times. In fact, American and Dutch inventors first worked on small electric car models as far back as the 1830s. A few decades later, William Morrison from Iowa created the first successful electric vehicle in the US – a model that looked similar to the old-fashioned carriages. By the end of the 19th century, electric cars became successful (particularly in cities), being sometimes preferred over steam or gas-powered vehicles, as they emitted less pollutants and were quieter. In the early 20th century, electric cars accounted for about one third of the number of cars in circulation in the US. However, with the invention of Ford’s gas-powered Model T car – more affordable and more powerful – sales of electric and hybrid cars declined.

But since a few years, the electric car is taking another go at it, this time with better, more reliable engine technology. The new electric car industry, having learned from the mistakes of the past, now has technology on its side. Following the invention of the lithium-ion batteries, the electric car saw its second chance emerge. 

A case in point for the revival of the electric car is ‘Tesla Inc.’, founded in 2003. The first tesla was delivered to the market in 2008, having lithium-ion battery cells and being able to last for longer journeys, per charge, than any other electric car before it. With continued, ceaseless improvements being made to these cars, the technology improved and so did the sales, leading the company to be ranked 8th among global carmakers in 2017.

Tesla proves that the electric car is gaining traction. Stock prices show that Tesla has overtaken giants of the car industry like Ford and Fiat. With electric cars providing a more environmentally friendly, sustainable and efficient vehicle, it is no longer a competitor to fuel cars, it is the clear champion. Other automotive brands, like ‘Porsche’ and ‘Audi’ have noticed the re-emergence of the electric car and, they too are developing their own electric alternatives.  

Electric cars will lower carbon emissions, reducing damage to the ozone layer and reducing smog. Ultimately, bettering our planet and public health. But there are some challenges to it. For example, the sourcing of critical materials for the vehicles like lithium and cobalt, and the carbon extensive process of production, which calls the electric car’s sustainability into question. However, through further developments, these challenges are likely to reduce. Another barrier to the adoption of electric cars is its high price: to date, these models remain unaffordable for many households.

Changes in infrastructure will also have to be made to accommodate the electric car: more charging stations, changes in the electric grid, etc. But, in return, it promises less strain on our planet. 

 

 

Photo by Andrew Roberts on Unsplash

 

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Why Israelis might be voting a third time

Why Israelis might be voting a third time

Last week, Israelis went to the polling stations. Again. And the recurrence might not stop there. 

 

Why a new election and what is at stake? 

Last April, a general election was held to elect the 120 members of the Knesset (the unicameral body of Israel). But without any coalition emerging, and therefore no majority supporting a (new) Prime Minister, the Israelis had to vote again last week. By calling this new election, the outgoing Prime Minister, Benjamin Netanyahu, hoped to gain an extra seat, the one he needed to secure a 61-seat majority coalition.  

 

What is the outcome? 

All this new election has brought is uncertainty. The results don’t really differ from six months ago. No party, in the newly elected Knesset, is in a position to constitute a dominant Government with its former allies. Netanyahu’s Likud Party (31 seats) is toe-to-toe with the liberal-centrist Blue and White party (33 seats), which both conceded a couple of seats to the Arab Joint-list (13 seats) and to the secular nationalist Yisrael Beiteiny Party (8 seats). It seems that calling this new election was actually a bad move for Likud’s leader who hoped he would win over Benny Grantz, the Blue and White party leader, but ended up making his party lose up to 7 seats and their prime position in the Knesset.

 

What is to be expected now?

The Arab Joint-list and Yisrael Beiteiny Party now have the influence to actually choose the next Prime Minister of Israel. If the Arab Joint-list announced to endorse Grantz as a Prime Minister, this is not what Avigdor Lieberman, Yisrael Beiteiny Party’s leader, intends to do. The one who very probably won some extra seats because he turned his back on the departing Prime Minister, said that he won’t endorse neither his former ally Netanyahu, nor Grantz.

In his quest for power, Netanyahu might have lost himself and his allies, tired of being repeatedly lied to. It sure gives the impression that Netanyahu’s reign has come to an end. Yet, one might wonder, if his successor will be up to the challenge of mollifying the unpredictable American ruler and the Russian monocrat.

Tough negotiations are ahead of the Israeli politicians. It seems that nothing has changed since they left the negotiations based on April’s results. The country looks as if it has reached a dead-end. A third election might, unfortunately, happen…

 

 

Photo by Rafael Nir on Unsplash

 

 

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