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May 03, 2016

TTIP now an election issue, meaning no deal

If you are a person of leisure with a high boredom threshold, you might want to go to this site where you can download all the TTIP documents release by Greenpeace Netherlands. There is, on substance, nothing shocking about this, except a realisation of how little progress the negotiators have made. We are still nowhere near an agreement on three of the really difficult issues - the conflicting US and EU philosophies on consumer protection, on tribunals for dispute settlement between investors and governments, and on public procurement. The papers restate known positions, but there is no hint of either a compromise or some imaginative new solution.

The importance of these papers is not their specific content, but the reaction to them, which is of course why they were leaked in the first place. The German reaction in particular was predictably hysterical, especially the bits on consumer protection. German media widely reported that the US is trying to soften standards for consumer protection in Europe, and specifically to introduce genetically-modified food through the back door. We reported last week that the German opposition to TTIP has risen dramatically over the last two years - though a narrow majority still seemed to be in favour. We would now assume that even this is no longer the case.

There is a genuine incompatibility between the so-called precautionary principle of the EU and the ex-post litigation approach of the US. The US insists that you can only ban products on the basis of hard scientific evidence. But if consumers can prove that they have been damaged, they can seek large compensations in the courts. The latter is not possible in the EU with its business-friendly legal system. So if the EU were to agree to the US approach, consumers would end up with the worst of all worlds - no protection at the regulatory end, and no right to legal redress in the courts. 

In contrast, the dispute about tribunals, while unresolved, seems to be less fundamental. The dispute here is whether the tribunals should be public or not, who appoints the judges, and whether or not there will be a right of appeal. And on public procurement, the unresolved issue is whether and how this is compatible with the Buy-America policy in the US.

While we proclaim no particular expertise in trade negotiations, this list of differences appears to us not particularly extreme at this stage of the process. But we see little chance of an agreement on TTIP this year - and by extension next year given the electoral time tables in Europe. We have reported that François Hollande is considering blocking the agreement. We have also reported that the new Austrian president - whoever it will be - will almost certainly not agree either. The German grand coalition still supports it - at its own peril (see below on grand coalitions). But public opposition in Germany is growing, and the SPD in particular is coming under pressure to block it or lose its remain 20% share of the votes.

It is fair to say that the leak of the papers has turned TTIP into a major election issue in both Germany and France. This means that an agreement is unlikely this year. One option would be a mini-version of TTIP, one that excludes the controversial bits, but that would render the agreement almost pointless. The alternative would be a postponement (perhaps hoping that it will get much easier under President Trump and President Le Pen!). Or else, it just might not happen.

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May 03, 2016

No hopes for a deal before eurogroup meeting

Expectations are low even in Athens that a deal can be reached on the bailout review for the eurogroup meeting on May 9. The difference yet to be bridged is too large yet between the IMF and the Greek government proposal on €2bn in contingency measures. To Vima writes the government’s argument that legislating pre-emptive measures is flimsy, and that Alexis Tsipras might not get around to a reshuffle, with Euclid Tsakalotos and his Group of 53 opposing such a package. The Greek government seem to be preparing for other options as well. One of them is asking the other party leaders for a written consent along the lines of the letter of Antonis Samaras in 2011. Opposition parties want none of this, saying it is the government’s responsibility to negotiate the content and take responsibility for its consequences. There is also talk about early elections, but it is not clear how serious this is or whether this is just part of the scare campaign to get MPs in line. To Vima raised the question of what happens if the pension and tax reform is legislated as scheduled, 9-10 May, without review agreement. Are they then in breach of the July agreement? Some hope that the eurogroup meeting is the one to break the impasse, while others already count on a summit, as Alexis Tsipras gets ready to rattle for support.

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May 03, 2016

Turkey miraculously fulfils conditions for visa-free travel

The European Commission is set to issue a "qualified" recommendation this Wednesday that Turkey can be given visa-free travel, writes Politico. This means the Commission still recommends the decision to be contingent on Turkey fulfilling a long list of requirements, but the final decision is now for the Council to make. This is likely to start another round of debate on whether the EU is compromising its principles for the sake of the refugee deal with Turkey.

As long as the external borders, which the deal with Turkey is supposed to help closing off, are perceived as insecure, member states have a strong incentive to close internal borders, even within Schengen. Another decision to be published on Wednesday is to allow internal border controls to continue for a maximum of six months, and subject to Commission monitoring. The plan is to lift the border controls within Schengen by the end of the year.

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May 03, 2016

5,000 amendments for the El Khomri bill

The labour reform bill will be discussed in the French assembly as of today. To give you a flavour of the show we are likely to see: there are 4.983 amendments on the table, one of the most amended bills in recent years, just next to the same-sex marriage bill. Most of the amendments did not come from the opposition, but from the left, and this although the most contested articles have already been changed. 

It is still not clear whether the bill can be adopted with a sufficient majority or whether the government will have to use article 49-3 to push the reform through without vote, a strategy used for Macron’s reforms last year and which the government wanted to avoid repeating by all means. There are 15-20 MPs of the majority who oppose the El Khomri labour reform bill, no matter what concessions they might get. Christophe Sirugue, the man in charge of convincing the MPs to get the law passed, told Le Parisien that there are another 40 MPs needed for a majority to pass the law. They scheduled 14 sessions until a vote on May 17. If this fails, the bill will end up in a committee of members from the assembly and the senate. And if this fails to solve the impasse, article 49-3 is back on the table.

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May 03, 2016

The disaster of grand coalitions

Wolfgang Munchau has a column in which he says the SPD's only chance of salvation is to leave the grand coalition, and to connect with its electoral base in opposition. The party is now under 20% in the polls, the result of life in a grand coalition where it supports policies such as TTIP, which are deeply unpopular especially among SPD voters. The party has lost votes to the left and to the right of the political spectrum. Munchau lists how grand coalitions of the past have always encouraged the political extremes, and this is now happening again with the rise of the AfD, which has become a firmly established part of the German political system - the only party that advocates a withdrawal from both the EU and the eurozone. The CDU has also lost votes to the AfD. Angela Merkel is the most centrist leader the party has ever had - which is perfect for running a grand coalition, but has led to a severe fall in the party's support. Munchau notes that another grand coalition in 2017 - which is a possible outcome of the election - would make the AfD the largest opposition party. Since opposition parties eventually take power, it could expect to become a majority government party in the 2020s. The difference between Austria and Germany is merely ten years.

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  • Waiting in Austria
  • Greek court puts Turkey deal on hold
  • Sovereignty and rule of law in Poland
  • The age of the disgruntled
  • May 17, 2016
  • Could the Podemos-led alliance surpass the PSOE?
  • Afraid of Merkel
  • Is Montebourg back?
  • The Netherlands and Germany wrangle over a few hundred refugees
  • May 13, 2016
  • Brexit polls inconclusive, but Leave is getting stronger
  • What future for the Socialist rebels?
  • Christian Kern, a manager, to be the next Austrian chancellor
  • On bank capture of the press
  • May 09, 2016
  • High noon over debt relief
  • A French plan for a core Europe
  • Polish opposition takes to the streets
  • May 05, 2016
  • The case for dropping TTIP
  • Another feud amongst French Republicans?
  • Where did the bailout money go?
  • What the Austrian coalition must do (and won't)
  • May 04, 2016
  • Hungarian refugee referendum to go ahead
  • Is a TTIP agreement out of reach?
  • May 03, 2016
  • TTIP now an election issue, meaning no deal
  • No hopes for a deal before eurogroup meeting
  • Turkey miraculously fulfils conditions for visa-free travel
  • 5,000 amendments for the El Khomri bill
  • The disaster of grand coalitions