Half-time for the French Presidency

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Three months into the six-month French presidency of the EU Council, there is not much time left to deliver on its economic policy priorities.

While the French successfully concluded negotiations with the European Parliament on the Digital Markets Act (DMA) and the International Procurement Instrument (IPI), other priorities remain uncompleted.

For example, the French government set itself the goal to get to an agreement among member state governments on the directive to implement the global corporate minimum tax in the EU.

Facilitated by the OECD, a global minimum tax of 15% for large companies was agreed upon by more than 130 countries in October 2021, after which the EU Commission proposed an EU directive to implement the agreement consistently across the EU.

French finance minister Bruno Le Maire wanted to achieve an agreement on the directive by mid-March. No wonder he seemed slightly frustrated when he realised that he could not get the necessary unanimous agreement from his fellow EU finance ministers in a meeting on 15 March because four member states withheld support.

“I would just like to remind you that everybody around this table has already supported this agreement at the OECD level,” Le Maire told his fellow finance ministers that day.

In a press conference following the meeting, he assured everybody that he was patient and that it did not matter if the consensus-building process took three weeks more.

Those three weeks end on 5 April, when finance ministers meet the next time. It is the last chance to get the agreement on the minimum tax over the line before the French presidential elections on 10 April.

From Minimum Tax to Minimum Wage

It will definitely take longer than this to achieve another goal of the French presidency; getting an agreement between member state governments and the EU Parliament on a new directive on adequate minimum wages.

The directive aims to ensure that statutory minimum wages are “adequate” in the countries where they exist. It also aims at higher levels of collective bargaining.

Negotiations between the French presidency and the Parliament started in January this year, but the most crucial points of the directive have not been discussed. For example, the definition of an “adequate” minimum wage and how strictly EU member states have to comply with the directive is still up in the air.

“April is going to be a decisive month,” an EU Parliament source told EURACTIV, saying that the most crucial differences will be discussed at a meeting at the end of April.

While Parliament argues for a higher minimum wage and levels of collective bargaining, the French presidency hast to consider the reluctance of several member state governments who do not want the EU to meddle in domestic labour policies.

Even though time is short, an agreement before June is possible since it is in the interest of both the Parliament and the French presidency to wrap everything up before the Czech presidency in July.

Moreover, EU Parliament sources say that progress is being made and that there was a good “dynamic”.

However, any progress in the coming months will depend on the results of the presidential elections in France. Should Emmanuel Macron be voted out of office, a transition period towards a new government can be expected to make French-led negotiations in the EU grind to a halt for some time.

For now, polls suggest that Macron is rather safe in his seat. But he is himself the proof that, in French presidential elections, anything can happen.

Chart of the Week

Remember Brexit? It’s this existential issue we used to care about before Putin reminded us what existential issues really are.

Anyway, trade statistics did not forget Brexit. Eurostat’s new figures show how the trade in goods between the island kingdom and the European trading bloc suffered from the British break-away.

Graph by Esther Snippe

In January 2021, when the withdrawal agreement between the EU and the UK came into force, imports from the UK dropped by more than half, while exports decreased by about a fifth. The numbers have since normalised somewhat, but they remain consistently and considerably lower than EU trade figures with other non-EU countries.

Imports from the UK are taking a particularly big hit, leading to a higher current account surplus for the EU. Imports from the UK have dropped in the product categories of chemicals, food and drink, and significantly in machinery and vehicles. You can scroll through the more detailed data here.


Literature Corner

Gender Representation in Think Tank Publications: The Brussels Binder initiative, which aims to increase the representation of women in the EU bubble, together with two think tanks took a look at how well women are represented in publications of European and other think tanks. The results do not paint a very balanced picture, with only around a third of authors being female.

The Wall Street Consensus: Daniela Gabor critically explores how finance firms try to reorganise international development interventions around partnerships with global finance.

Eclipse of rent-sharing: The effects of managers’ business education on wages and the labour share in the US and Denmark: Is your new boss a business manager? You might want to run. This new paper by Daron Acemoglu, Alex He, and Daniel le Maire finds evidence from the US and Denmark that managers with a business degree reduce their employees’ wages. Within five years of the appointment of a business manager, wages decline by 6% in the US and by 3% in Denmark.

The EU must triple down on green investment: Christian Odendahl and John Springford from the Centre for European Reform argue for more public investment in climate-friendly technologies. “Climate investment has always been a matter of national security. Russia’s war on Ukraine has simply brought this to everyone’s attention,” they write, arguing for more taxes on polluters and on windfall profits, as well as for national and European borrowing.

[Edited by Alice Taylor]

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