Monthly Archives: May 2007

Nicolas Sarkozy used the French election campaign to resurrect the old whine about "fiscal and social dumping": the idea that impoverished eastern European countries are undercutting companies in the west through lower tax rates and poor working conditions.

There are at least three good reasons why the French president should stop stoking those fears. First, there is scant evidence that jobs are really being "delocalised" to low-cost destinations in the east in large numbers. Such cases that exist are usually well publicised precisely because they are so rare.

Second, Mr Sarkozy is not going to get anywhere in his campaign to force eastern countries to put up their tax rates (like Slovakia’s 19 per cent flat tax). These countries do not have France’s excellent public services or transport systems and have to compete somehow. Tax is a national issue, not a matter for the EU or Paris.

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The Nicolas Sarkozy show rolled into Brussels last week and the hyperactive new French president gave a tantalising glimpse of his European agenda.

He wants a tough European position on international trade talks, and for the EU to shield its citizens as they adapt to the rigours of globalisation.  So what does he make of the EU’s rules on maximum working hours -  health and safety laws designed to protect employees?

Gordon Brown, incoming UK prime minister, will want an answer tout de suite.

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Jean-Claude Trichet, European Central Bank chief, won some grudging admiration from trade union bosses in Seville after giving a typically urbane explanation of why workers had to keep their pay claims down for the sake of the economy.

Mr Trichet argued at the European Trade Union Confederation’s four-yearly congress that low pay rises equalled low inflation, equalled stability, equalled more opportunities for the comrades’ unemployed brethren. "He was pretty good," admitted one veteran union baron.

If he had not been plausible he might have been given a much tougher time during a panel debate with senior union leaders I happened to be chairing. Because workers feel it is time they got their share of what has so far been almost a "payless recovery".

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The European Union is often compared to a bicycle: if it stops moving forwards it will fall over. The bicycle theory also applies to multilateral trade talks.

Hence negotiators keep having meeting after meeting to revive the Doha round, even if they appear only to be inching further down a cul de sac.

Trade ministers chatted in Paris early last week. Then on Thursday and Friday Peter Mandelson, the EU trade commissioner, hosted his counterparts from the US, India and Brazil in Brussels. The talks were, inevitably, “productive”, but just as inevitably did not lead to a breakthrough. You can probably write the closing statement for the next round in June yourself.

In the meantime, the EU ministers are preparing to jump out of the saddle.

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US homeland security chief Michael Chertoff swept into Brussels to soothe European concerns about an anti-terror agreement that gives Washington information on airline travellers. To recap: some Europeans are fuming about an American requirement for airlines to supply the US with data (passport, credit card, seating information and more) on passengers flying to the country. The debate – often portrayed here as the US trampling on fundamental rights – rumbles on. Negotiators are trying to update the data-sharing deal and Chertoff gave well-oiled answers about why it was crucial to fight terrorism. But it was his comments on the roots of terrorism that caught my attention. First, he was asked about the differences in radicalisation in the EU and the US, then he moved onto some more general observations. Read more

Amid all the distraction of the Paul Wolfowitz affair it’s easy to forgot that life goes on – in abject poverty – for the billions earning less than a dollar a day.

Europe has been vocal in its call for the Wolf to leave his lair. It is once again burnishing its pro-development credentials. But are they all that they are cracked up to be?

Heidemarie Wieczorek-Zeul, the German development minister, said this week that the EU was ahead of its target to dedicate 0.39 per cent of gross domestic product to aid in 2006, hitting 0.42%. The bloc already provides half of the world’s development aid. While she is not known as "Red Heide" just because of the colour of her hair, campaigners beg to differ.

Concord, the alliance of European NGOs released a damning report last week. It said around a third of aid was debt relief, housing refugees in the EU and even paying for foreigners to be educated at European universities. Belgium even tries to pretend its peacekeeping mission in Congo is aid. No doubt any Congolese chicory growers are benefiting from the troops’ presence.

In short, G8 pledges to double aid to Africa were not being met.

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It has been quite a while since the EU split over a piece of legislation, but there are signs that this blissful state is about to end. The past few months of peace were, after all, caused by the uncertainty surrounding the next French president. Who would succeed tired Jacques Chirac? Just how obstructive and protectionist would his successor be?

Since Nicholas Sarkozy triumphed in from last week’s election, much of that uncertainty has now been removed. And while it is too early for France’s partners to reopen negotiations on sensitive dossiers quite yet, you can hear the legislative machine creaking back into action all over Brussels.

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Frankenstein’s – or rather Bolkenstein’s – monster was resurrected in Brussels on Tuesday, reopening some raw wounds.

The services directive, which received its nickname from angry trade unions after it was tabled by Frits Bolkestein, the fiery liberal Dutch ex-internal market commissioner, was the hottest political potato in town last year.

It was supposed to allow plumbers, doctors, hairdressers and other to ply their trade freely across borders. Unions and Socialist parties said it would lead to social dumping and a race to the bottom for labour rights. Rightwingers said the EU’s internal market was a nonsense without it, since service trade was far bigger than that in goods.

A painfully stitched-together compromise removed health services and the idea that they should abide by the laws of their countries of origin rather than where they worked.

The European parliament patted itself on the back for coming up with the proposal and getting warring national governments to endorse it too. On Tuesday, however, dissident rightwingers in the European People’s party joined Liberals to back a surprise call for health services to be put back in.

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Intriguing to see how the mobile phone “roaming” law is playing out.

Viviane Reding, EU telecoms commissioner, has made a point of saying that Europeans will pay less for holiday phone calls this summer.

Will the European Commission end up with egg on its face?   

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Estonia’s problem may be about to become Europe’s problem. The Russian outrage sparked by the Baltic state’s decision to remove a Soviet war memorial from Tallinn city centre could have wider ramifications for the whole of the EU.

The rowdy demonstrations outside Estonia’s embassy in Moscow, backed by vitriolic comments in the Russian media, have been worrying enough for diplomatic families to be sent home out of harms way.

Estonia, as an EU member, rightly expects support from the rest of the Union. On Wednesday Germany, holder of the EU presidency, insisted that Moscow respects its obligations to protect embassies, diplomatic staff and their families.

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