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State of the Union Address 2016: Towards a better Europe – a Europe that protects, empowers and defends | European Commission – Speech – [Check Against Delivery]

Strasbourg, 14 September 2016

Mr President,

Honourable Members of the European Parliament,

I stood here a year ago and I told you that the State of our Union was not good. I told you that there is not enough Europe in this Union. And that there is not enough Union in this Union.

I am not going to stand here today and tell you that everything is now fine.

It is not.

Let us all be very honest in our diagnosis.

Our European Union is, at least in part, in an existential crisis.

Over the summer, I listened carefully to Members of this Parliament, to government representatives, to many national Parliamentarians and to the ordinary Europeans who shared their thoughts with me.

I have witnessed several decades of EU integration. There were many strong moments. Of course, there were many difficult times too, and times of crisis.

But never before have I seen such little common ground between our Member States. So few areas where they agree to work together.

Never before have I heard so many leaders speak only of their domestic problems, with Europe mentioned only in passing, if at all.

Never before have I seen representatives of the EU institutions setting very different priorities, sometimes in direct opposition to national governments and national Parliaments. It is as if there is almost no intersection between the EU and its national capitals anymore.

Never before have I seen national governments so weakened by the forces of populism and paralysed by the risk of defeat in the next elections.

Never before have I seen so much fragmentation, and so little commonality in our Union.

Read the full Speech here

Download the Speech in .pdf  here

EU-US negotiations on TTIP: State of Play | EP Think thank

At the conclusion of the 13th round of negotiations on the Transatlantic Trade and Investment Partnership (TTIP), held in New York in April 2016, discussions between the European Union and the United States had succeeded in covering all of the agreement’s chapters. The 14th round of negotiations takes place in Brussels from 11–15 July 2016.

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The “EEA minus” option: amending not ending free movement, by J. Portes | NIESR – National Institute of Economic and Social Research

Before the referendum, it appeared that a Brexit vote would mean that the UK faced a clear choice on immigration policy.  If we wanted as far as possible to retain access to the Single Market,  either by maintaining membership of the European Economic Area (like Norway) or via a series of bilateral agreements (like Switzerland) then we would need to accept that freedom of movement would continue much as now.  Recognising this – and regarding it as an unacceptable price to pay – both UKIP and, eventually, Vote Leave rejected Norway/Switzerland type options, accepted that we would not be members of the Single Market on anything like the current terms (although we could negotiate a bilateral trade deal) and argued for an immigration system that did not discriminate between EU and non-EU nationals, as I discuss here.

However, since the referendum result, political and economic realities have made both of these options look increasingly unattractive.  There appears to be a growing consensus, uniting almost all pro-Remain politicians and much of the Leave camp, that the UK should seek to maintain as full access to the Single Market as possible. At the same time, as I noted, it is impossible to view the referendum result as anything other than a rejection of free movement in its current form.  As a consequence, it looks likely that the UK’s negotiating position (particularly if Theresa May, the current favourite, becomes PM) may coalesce around “EEA-minus”, described by George Osborne’s former Chief of Staff Rupert Harrison as “a bit more immigration control and a bit less single market”.  This represents a much more realistic version of Boris Johnson’s desire to have his cake and eat it; perhaps more making our own bed and lying in it.

I will leave it to others to analyse what “a bit less Single Market” might mean; this blog attempts to set out some first thoughts on what, in practice, “a bit more immigration control” might entail, within the limits of administrative and political feasibility. I see two broad types of control:

Quantitative restrictions

 Under this option, there would be limits to the number of EEA nationals who could legally work here.  That sounds simple. In practice it would be anything but, for several reasons:

  • It seems likely that EEA nationals who have already exercised free movement rights will retain those in perpetuity (absent this it is difficult to see any negotiation being successful). As a matter of practicality, this is likely to mean that those who have already registered for a UK National Insurance number would not be subject to any future restrictions.  But – given the very large increase in short-term migration identified by the Office for National Statistics – this means that there are (conservatively) at least 1.5 million EEA nationals not currently resident in the UK who already have some connection with the UK labour market and who could therefore in future migrate to the UK without being subject to any quota.
  • It does not seem likely or feasible that we would restrict EEA nationals right to enter the UK without a visa. We do not have a comprehensive exit or entry database, nor any sort of population register; so we have no way of directly monitoring the movements of EEA nationals in and out of the UK.  So it is difficult to see how we would find and remove EEA nationals who were “overstaying”; nor, frankly, to see why this would be priority for an already woefully overstretched Borders Agency.

The obvious way to implement a quota, then, would be to restrict the issuance of new National Insurance numbers to EEA nationals, with a monthly or annual ceiling.  Once that ceiling was hit, any further EEA nationals seeking to work in the UK would have to apply through the system that currently applies to non-EU nationals.  Even this would be hugely complex.  For example, what would be the status of the spouses of “qualifying” EEA national, whether from inside or outside the EU, who did not “qualify” in their own right? Would they be entitled to work? Or to reside, but not work?

Despite the complications, such a system would – given sufficient political and bureaucratic will and effort – be just about feasible.   However, for the reasons above, the impact on migration numbers (as measured in the official immigration statistics), will be slow, partial and indirect.

Other restrictions

Are there other restrictions which could increase the UK’s control over immigration?  At one point in his unsuccessful renegotiation, the Prime Minister suggested that free movement could be restricted to EEA nationals who already had a job offer, and when he failed to deliver this he was much criticised, with the Leave campaign making much of the fact that the latest immigration statistics showed that an estimated 77,000 EEA nationals arrived last year to look for work, but without having a job to come to.

However, this displays a remarkable ignorance of how flexible labour markets actually work in an integrated market. How, in practice, would such a restriction be imposed?  As noted above, we won’t be stopping EU migrants at the border. Would we require them to apply for an NI number from abroad – with evidence of a job offer? There would be nothing stopping them from coming to the UK, finding a job, returning home, and then re-entering with their “offer”; the only impact would be on Ryanair’s profits. Alternatively, agencies would no doubt spring up to offer a package deal service.  There would be some extra transaction costs for employers and workers, but not much impact on migration.

More plausible would be restrictions not on the basic Treaty principle of free movement but on the various associated rights which various EU directives and the European Court of Justice have created around it. These include the rights to access welfare benefits and public services on a roughly equal basis to citizens; and the rights of non-working spouses and family members, both from within the EU and outside it.  Such restrictions were of course what the Prime Minister sought to obtain in his renegotiation, with at best partial success; however, if we are outside the EU itself, there might be considerably more room for manoeuvre. Again, however, the impact on numbers is likely to be indirect and uncertain.

To sum up; given the political will, outside of the EU we could indeed restrict free movement without ending it.  There would, however, undoubtedly be a political and economic price to pay in terms of our access to the Single Market. EEA nationals would continue – contrary to the promises of Vote Leave – to maintain a highly privileged access to the UK labour market compared to non-EEA nationals, albeit not to the same extent as at present. And the impact of restricting the currently almost entirely unconstrained rights of EEA nationals to live and work here on migration flows, actual or measured, would be indirect and uncertain; although, as I noted previously, this debate is in any case likely to play out against a background of falling (net) migration from within the EEA.

About the National Institute of Economic and Social Research – NIESR

The National Institute of Economic and Social Research is Britain’s longest established independent research institute, founded in 1938. The vision of our founders was to carry out research to improve understanding of the economic and social forces that affect people’s lives, and the ways in which policy can bring about change. Over seventy-five years later, this remains central to NIESR’s ethos. We continue to apply our expertise in both quantitative and qualitative methods and our understanding of economic and social issues to current debates and to influence policy.

Brexit’s Blow To Globalization, by C.Rinhart | Project Syndicate

The United Kingdom’s Brexit referendum has shaken equity and financial markets around the world. As in prior episodes of contagious financial turmoil, the victory of the “Leave” vote sent skittish global investors toward the usual safe havens. US Treasury bonds rose, and the dollar, Swiss franc, and yen appreciated, most markedly against sterling.

When it became clear that the “Remain” camp had lost, the pound’s slide seemed to be on track to match the historic 14% depreciation of the 1967 sterling crisis. But the rollercoaster outcomes that we’re now seeing in global capital markets are not unique to the Brexit episode.

Brexit

What is unique, and particularly far-reaching, is the precedent Brexit sets for other countries (or regions) to “exit” from their respective political and economic arrangements – whether it is Scotland and Northern Ireland in the UK, or Catalonia in Spain. The borders of existing nation-states could be redrawn, or fenced off entirely if disgruntled member states submit to internal nationalist impulses and give up on the multi-decade experiment in European unification. (And, as Donald Trump’s presidential campaign in the United States shows, this impulse extends beyond Europe.)

With its systemic negative effects on finance, trade, and labor mobility, Brexit marks a major setback for globalization. The fallout from Brexit probably won’t spread as quickly as in outright financial crises, such as the 2008 financial meltdown or the 1997 and 1998 Asian episodes. But the aftereffects also won’t subside anytime soon.

The UK’s trade, finance, and immigration arrangements are far too complex and entrenched to be renegotiated quickly. In the meantime, many cross-border transactions in goods, services, and financial assets are likely to be placed on hold. Even if there are no other “exit” moments elsewhere in Europe, a protracted period of uncertainty in global capital markets seems likely.

It’s worth recalling that globalization did not begin with the current generation. The latter part of the nineteenth century, despite its technological limitations, was an era of rising global trade. Major waves of immigration radically diversified the demographic makeup of the US and other parts of North and South America. London was host to a rapidly growing global financial industry, as it had been since the time Britain emerged victorious from the Napoleonic Wars.

World War I ended this earlier wave of globalization; and, even with the return to peace, the world never really recovered. The economic depression of the 1920s in Britain, and of the 1930s in the rest of the world, ushered in a global wave of protectionist, inward-looking policies and beggar-thy-neighbor competitive devaluations. The last nail had been hammered into the coffin of globalization even before the outbreak of World War II. While not the original or singular cause of the worldwide slump, there is widespread agreement among economists and historians that policymakers at the time made a bad situation significantly worse.

After WWII, global integration finally began anew, first in trade and then, since the 1980s, in finance. During this time, London’s financial center awoke from its long slumber and helped the UK become one of the pillars of a new, deeply integrated international political economy. Prior to the 2008-2009 global financial crisis, most indicators of global trade and finance had reached new peaks, and European unification contributed significantly this. But, with the onset of the crisis, cross-border finance in Europe shrank as highly leveraged eurozone economies began to lose access to international capital markets, and concerns about private and public insolvency took center stage.

The financial crisis resulted in the steepest synchronous drop in world trade since the Great Depression of the 1930s. And global trade still has not recovered its earlier trajectory: since 2008, export volumes have risen at only about half the average annual rate of the pre-crisis period (3.1%, see figure below). Europe itself has experienced an even sharper slowdown.

change in global trade

The global financial crisis dealt a significant blow to globalization, especially in terms of trade and finance. Now Brexit has dealt another blow, adding labor mobility to the list.

Financial markets do not handle uncertainty well. With the world already facing anemic growth and low levels of investment, any adequate damage-control plan must include prompt resolution of the new rules of the game for Britain and its relationship with the EU. Any delay will cause further frustration and increase the odds of retaliatory policies from EU members. The last thing anyone needs is a tit-for-tat process of political divorce that only serves to deepen the global economy’s already-widening fault lines.

Read the full Article here

Joint Statement by Martin Schulz, Donald Tusk, Mark Rutte, and Jean-Claude Juncker, on the outcome of the United Kingdom Referendum | European Commission – Daily News

President Schulz, President Tusk and Prime Minister Rutte met this morning in Brussels upon the invitation of European Commission President Juncker. They discussed the outcome of the United Kingdom referendum and made the following joint statement: “In a free and democratic process, the British people have expressed their wish to leave the European Union. We regret this decision but respect it. This is an unprecedented situation but we are united in our response. We will stand strong and uphold the EU’s core values of promoting peace and the well-being of its peoples. The Union of 27 Member States will continue. The Union is the framework of our common political future. We are bound together by history, geography and common interests and will develop our cooperation on this basis. Together we will address our common challenges to generate growth, increase prosperity and ensure a safe and secure environment for our citizens. The institutions will play their full role in this endeavour. We now expect the United Kingdom government to give effect to this decision of the British people as soon as possible, however painful that process may be. Any delay would unnecessarily prolong uncertainty. We have rules to deal with this in an orderly way. Article 50 of the Treaty on European Union sets out the procedure to be followed if a Member State decides to leave the European Union. We stand ready to launch negotiations swiftly with the United Kingdom regarding the terms and conditions of its withdrawal from the European Union. Until this process of negotiations is over, the United Kingdom remains a member of the European Union, with all the rights and obligations that derive from this. According to the Treaties which the United Kingdom has ratified, EU law continues to apply to the full to and in the United Kingdom until it is no longer a Member. As agreed, the “New Settlement for the United Kingdom within the European Union”, reached at the European Council on 18-19 February 2016, will now not take effect and ceases to exist. There will be no renegotiation. As regards the United Kingdom, we hope to have it as a close partner of the European Union in the future. We expect the United Kingdom to formulate its proposals in this respect. Any agreement, which will be concluded with the United Kingdom as a third country, will have to reflect the interests of both sides and be balanced in terms of rights and obligations.” The statement is available online in ENFR and DE. A Memo is available here. Follow the press conference with President Juncker on EbS.

Britain’s EU Referendum Coverage | PubAffairs Bruxelles Editorial team

HIghlights 2

Primary and secondary sources of info

EU ref

David Cameron’s letter to Donald Tusk

EU referendum, BBC

Britain Stronger In Europe

Vote leave, Take control

Brexit, The Economist

UK’s EU referendum, Financial Times

EU Referendum, The Guardian

Britain’s EU referendum – The Telegraph

Latest Analysis, UK in a changing Europe

Brexit Vote – LSE Blog

UK renegotiation, Europp – LSE Blog

Britain and the EU, Centre for European Reform

UK & Europe, Euractiv.com

 

Will Brexit Destroy Britain and Europe? by P. Legrain | Project Syndicate

On June 23, British voters will decide in a referendum whether to remain in the EU or go it alone. Advocates of remaining, including Prime Minister David Cameron, may have the better arguments, but the future of the UK – and of Europe – is unlikely to be determined by reason alone. The long phony war about the United Kingdom’s place in Europe is over. An increasingly vicious domestic “Battle for Britain” has been underway for weeks. In a referendum on June 23, British voters will decide whether the UK remains in the European Union or, after more than four decades of membership, negotiates its withdrawal. Opinion polls are finely balanced. With the EU increasingly seen through the lens of economic crisis, political turmoil, and unwanted migrants, a British exit – or “Brexit” – is a realistic prospect. Indeed, advocates would seem to have the wind at their backs: In an age of widespread anti-establishment rage, their claim that bossy Brussels bureaucrats are to blame for everything wrong with Britain resonates widely, tempting voters to project their personal visions of Utopia onto a post-EU future. The “remain” camp, by contrast, must somehow sell the reality of the EU as it is, warts and all.While Britain’s debate about its relationship with “Europe” is often insular, Project Syndicate’s commentators bring a broader perspective to the question. They examine not only the likely implications of Brexit, but also how the UK arrived at this point and what the referendum – however it turns out – means for Europe’s future.

Read the full Article here